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A Pox on Them

When it comes to data delivery, the Telecommunications Act of 1996 has been a complete bust.

When it comes to data delivery, the Telecommunications Act of 1996 has been a complete bust. Five years after its enactment, the average consumer bandwidth in this nation is 34 kilobits per second — and the Bells seem determined to keep it there, despite seemingly insatiable demand for broadband. Its time to rethink this law, which imposes circuit-switched logic on an increasingly packet-switched world.

The only question is how to rethink it.

Sadly, the sole piece of serious communications legislation right now is the bill supported by Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee, which would authorize the Bells to carry long-distance Internet traffic without having to prove theyve opened their local markets to competition. And just to make sure no local competition is ever possible, it would also free them from the obligation to lease their high-speed data networks to competitors at wholesale prices.

Supporters of this bill couch fantasy arguments in free-market rhetoric. Consider the reasoning of keynote speakers at two premier telecom conferences in recent weeks.

Further reading

At Vortex, the high-level, invitation-only convergence event that brings together the elite movers, shakers and thinkers in the telecom sector each year, industry consultant Tom Nolle nearly touched off a riot three weeks ago by arguing that the Tauzin bill is the only way out of the industrys current morass. Until it is passed, Nolle asserted, there will be no incentive for the Bells to invest or innovate. Problem is, the Bells have never demonstrated any appetite for either. In fact, theyre notorious for investing in their own networks only when threatened by competition — the very thing the Tauzin bill would eliminate in data markets — or by government regulators. Seldom has any industry embraced such a consistent consumer-be-damned attitude.

Then last week at SuperComm, the premier telecommunications industry gathering, SBC Communications chairman Ed Whitacre Jr. defended the Tauzin bill by asserting that removing constraints on the Bells clearly improved competition. His proof? Wherever Bells had been allowed into the long-distance market, competitors in the local market were flourishing. As logic goes, this was gymnastics, since the Federal Communications Commission has insisted that local competition be in place before the Bells are allowed into long-distance.

Interestingly, both speakers were followed immediately by defenders of the Telecom Act. At Vortex, former FCC Chairman Bill Kennard bluntly labeled Nolles argument "bullshit." At SuperComm, current FCC Chairman Michael Powell was understandably more politic. He simply pointed out that in New York and Texas, the two states where Verizon Communications and SBC, respectively, had met the FCCs requirements for entering long-distance markets by opening their networks to competitive local exchange carriers (CLECs), local competition was the highest in the nation.

True enough, but if this is going to be the level of debate between the two sides, I say: A pox on both their houses. The governments defense of the Telecom Act is as short-sighted as the Bells arguments are fatuous and greedy, because forcing the Bells to open their lines to CLECs isnt competition so much as a weird form of affirmative action for the telecommunications industry. In the long run, it wont work: For one, the Bells only claim to innovation is creating new ways to trip up CLECs. Furthermore, real competition in data delivery can only be realized with the growth of alternative networks, such as cable, satellite, fixed wireless, Gigabit Ethernet over fiber and data over power lines.

Yet, government policy ignores these technologies — or, worse, impedes them through the FCCs incompetent handling of things like spectrum allocation and RF interference certification. With the exception of cable, there is so little investment available for these alternative networks that their partisans have no way to buy the kind of love Congress bestows on the Bells and long-distance carriers. And it is Congress, through its funding, oversight and legislation, that determines the FCCs priorities.

Dont expect visionary action out of Washington — or a break in the data logjam at the edge of the network — anytime soon.